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IT Workforce

Today, organizations are very concerned about the skills their IT employees need to help their businesses reach their goals. But with increased use of sourcing strategies non-IT firms and IT providers are reviewing staffing models and asking which skills are the most critical to keep in house, outsource, look for in entry-level and mid-level hires? The IT Workforce Research Team sponsored by SIM is dedicated to answering this question.

The IT Workforce Research Team consists of nine U.S. and Australian researchers who seek to understand current and future needs for IT skills and capabilities in private and public sector organizations. A 2005 study focused on the skills needed by the in-house IT departments of organizations across non-IT industries and a recent study investigated what skills universities should be providing their graduates and how this may change over the coming years.

Developing Information Systems (IS) skills for a company's workforce has always been challenging, but global sourcing growth has caused the determination of needed IS skills to be more complex. The increased use of outsourcing to an IS service provider and from high-wage regions to low-wage regions has affected what IS skills are required globally and how to distribute the workforce to meet these needs. To understand what skills are needed in locations that seek and those that provide outsourcing, we surveyed IS service provider managers in global locations. Results from 126 reporting units provide empirical evidence that provider units in low-wage regions value technical skills more than those in high-wage regions. Despite the emphasis on commodity skills in low-wage areas, high-and low-wage providers value project management skills. Low-wage regions note global and virtual teamwork more than high-wage regions do. The mix of skills and the variation by region have implications for domestic and offshore sourcing. Service providers can vary their staffing models in global regions which has consequences for recruiting, corporate training, and curriculum.

In 2005, a team of researchers sponsored by the Society for Information Management Advocacy program interviewed senior executives in Information Technology (IT) departments about their current and future workforce trends and skill requirements. This paper presents the results of that research: more organizations are increasing their in-house IT staffs than are decreasing them. IT executives say it is critical to own business and project management skills, and they seek these skills in their mid-level hires. The use of offshore workers is increasing, primarily through domestically headquartered providers. Technical skills are more likely to be externally sourced, but they are also sought in entry-level hires.

The study points out the challenge of transforming technically skilled entry-level hires into mid-level IT managers with strong business and project management skills, given current IT recruiting and hiring trends. It also highlights the need for practitioner-academic collaboration to ensure appropriate development of IT professionals throughout their careers. Why study the IT workforce?

Global IT sourcing, baby-boomer retirements, and low IT enrollments in universities are prompting changes in the IT skills available to and desired by IT departments. The resulting potential for a mismatch of supply and demand is a concern for business executives and academics alike. To address these concerns, the Society for Information Management (SIM) sponsored research on the current and future needs for IT skills in IT departments. A team of over 20 U.S. and European investigators interviewed senior IT executives between May and October 2005. See Appendix A for a brief description of the research methodology. This paper reports five key results from this study. Overall, our results indicate that most IT departments are building up the quality and quantity of their IT workforces, not downsizing them.

IT Workforce Trends: Implications for IS ProgramsFindings in an IT workforce study support the emphasis of business content espoused by IS curriculum guidelines. Business domain and project management skills are critical to keep in house while technical skills were cited as the top skills sourced. Paradoxically, technical skills are those cited for entry-level positions. We discuss the issues raised by these findings and recommend several approaches for IS programs to consider. IS programs must offer a functionally integrated curriculum and deliver it in an experiential business context. We provide several examples of innovative pedagogical approaches and industry alliances which demonstrate mechanisms to provide students with a stronger business orientation in applying IT. We recommend a more proactive approach to enrollment including better promotion of IS programs.

Information technology workforce skills: The software and IT services provider perspectiveIt is now commonplace for an organization to turn to external firms for the provision of IT services and software. As technology advances and the business environment continues to evolve, a key challenge facing IT software and service providers is identifying critical skill sets, both today and in the future. The challenge is compounded as a result of the continuing growth of outsourcing and the increasing demand for technology solutions. This paper explores that challenge through a survey of IT software and service providers. We extend and complement previous studies of non-IT firms by comparing skills sought by non-IT organizations with those of IT services and software providers. Results indicate that, surprisingly, software and services providers place more emphasis on business domain and project management skills than on technical skills. This has implications for the hiring and retention practices of managers, and for academic curriculum and course offerings.

The Requisite Variety of Skills for IT Professionals IT professionals are beset by ongoing changes in technology and business practices. Some commentators have suggested that, in order to stay competitive, IT professionals should retool themselves to gain competency in specific in-demand technical skills [1]. This paper argues that thriving in such a dynamic environment requires competency in a broad range of skills, including not only technical skills, but non-technical skills as well.

Our research shows that IT departments in non-IT companies1 report that while both technical and non-technical skills are important, the skills most critical to retain in-house and most sought in new mid-level employees are non-technical skills such as project management, business domain knowledge and relationship skills. These skills are critical because they enable IT departments to work effectively with other departments, internal users, and external customers and suppliers. Non-technical skills leverage technical skills to augment the organization's overall effectiveness in designing and delivering solutions to meet an organization’s challenges and opportunities.

These findings depart from previous articles emphasizing technical skills as a basis for valuing IT workers [2] and other research recommending business-oriented skills only for those managing IT workers, not for IT professionals themselves [2, 3]. Our findings lead us to the realization that in today's environment of continuous and fast-paced change, a mix of skills is essential for IT professionals.

We believe that the Law of Requisite Variety can help explain the need for greater breadth of knowledge and skills among IT professionals [3]. From cybernetics, the Law of Requisite Variety states that adapting to change requires a varied enough solution set to match the complexity of an environment [4]. In this case, IT workers need a broad enough range of knowledge and skills to meet the demands of their increasingly dynamic and complex profession. Based on our research, we offer a framework outlining six skill categories. We believe that all six skill categories are critically important for the career development of IT professionals.

The Information Technology Workforce: IT Provider Trends and Implications 2006-2009The Information Technology Workforce (ITWF) research project has collected data about IT human resources since 2005. In Phase One the research team examined the skills and capabilities that IT departments, or client organizations as we call them (those buying IT services from service providers), needed to effectively support their organization’s mission.1 In Phase Two, we focused on the skills and capabilities sought by providers. This report summarizes our Phase Two results.

The ITWF team for Phase Two consists of nine academic investigators. Data was gathered via a Web-based survey that was available to provider respondents from late 2006 to mid-2007. The respondents were primarily senior managers from an internationally dispersed group of 126 IT service provider reporting units (a few respondents are from different units of the same parent company). Three quarters of the firms are small to medium enterprises and two-thirds are U.S. based. Our data primarily focuses on changes in staffing, skills considered critical to the providers, and skills desired in entry and mid-level hires. This report concludes with some comparisons of these provider-oriented results with our earlier client results.

Changes in staffing

All respondents expected their units to have more employees by 2009, with 13% expecting dramatic growth by then. Smaller units expected higher growth than larger units.

The most frequently cited reasons for staff changes were business increase and merger/acquisition.

Among the smaller units, by far the majority expect few retirements by 2011. Among larger units, about a quarter predict that between 11% and 25% of their staff will retire by then.

Critical skills for providers

Providers see their project management and business domain skills as critical. They also value two customer-facing skills, systems analysis and system design, as well as system testing.

Skills in working globally are becoming more critical regardless of firm size and location.

The skill sets providers seek for entry-level workers and mid-level workers also include project management, systems analysis and business domain skills. Providers expect entry-level workers to have foundational technical skills as well (e.g., programming & testing).

Paradigm shifts from rapidly changing technological and business environments dictate that IT professionals adjust their skills and capabilities to effectively support their organization’s mission. Global IT sourcing, the shift from IT services to business process services, pending baby-boomer retirements and declining IT enrollments in U.S. and European universities are prompting fundamental changes in the nature of IT skills and capabilities available to and desired by both vendor and client organizations. The resulting potential for a mismatch of supply and demand is a source of concern for business executives and academics alike.

To address these concerns, the Society for Information Management (SIM) sponsored research to:

Understand the current and future needs for IT skills and capabilities in both internal IT departments and IT service providers;

Determine how organizations are recruiting and developing in-house IT skills and capabilities in 2005;

Determine the extent to which organizations access IT skills and capabilities through global sourcing in 2005 and 2008; Describe what skills universities should be providing their graduates.

A team of over twenty U.S. and European investigators conducted the research via structured interviews of senior IT managers held from May to October 2005. The respondents were primarily senior IT management from a variety of industries who voiced serious concerns over a number of workforce issues.

Distribution of IT Staffing

At the beginning of the millennium IT staffing levels suffered significantly. The demand for IT workers fueled by Y2K ended, the dot-com bubble burst and a U.S. recession began. In response, organizations began reducing their internal and sourced IT staffing levels; however, recent reports suggest that the pendulum is swinging the other way. This study’s results confirm those reports to some extent, showing that the number of organizations adding IT staff exceeds the number decreasing IT staff. However, this picture of IT demand differs from the beginning of the decade. The source of IT talent and the skills IT employers seek in candidates signifies a structural shift in the IT workforce. Related to the distribution of IT staff in 2005 and 2008 among in-house, independent contractors and third-party providers, research results reveal the following:

The IT workforce, including in-house, independent-contractor, and third-party-provider full-time equivalents (FTEs) will remain basically unchanged from 2005 to 2008.

Organizations will increasingly use blended sourcing strategies to balance internal IT headcount, resulting in increased opportunities for third-party providers and independent contractors.

The composition of in-house staffing varies among organizations of different size. For instance, small-medium enterprises (SMEs) anticipate greater increases in internal FTEs than larger organizations.

SME organizations anticipate greater use of third-party providers and no use of FTEs located offshore by 2008, in comparison to larger organizations that anticipate an increased use of domestic third-party providers, more specifically, those providers with FTEs at offshore locations.

The overall use of independent contractors is expected to remain relatively unchanged overall; however SME organizations will increase use of independent contractors from 2005 to 2008.

Baby boom retirements will not be a factor in IT demand or hiring between 2005 and 2008; however for the purposes of succession planning, baby boomers will begin to reach the traditional retirement age of 65 by 2011.

IT Skills and Capabilities

In addition to understanding the distribution and sources of IT capabilities, this research explored which skills organizations are seeking from different sources. IT management supplements their in-house staff with sourcing from independent contractors and both domestic and offshore firms. The skills and capabilities identified by respondents as being sourced to independent contractors or third-party providers are technical in nature. The following identifies skills related to sourcers, leaving in house, and critical to retain in house.

Business skills and capabilities represent five of the top ten skills respondents identified as critical to keep in-house in 2005.

Project management skills, such as project planning, leadership and risk management were also found in the top ten skills to keep in-house in 2005.

The remaining two skills found in the top ten are systems analysis and design, both technical but client-facing. Six of the ten skills identified by respondents as currently sourced, are also categorized as the least critical to keep in-house, such as system testing and telecommunications.

The use of a third-party provider to fill a skill demand identified as critical to keep in-house, such as systems analysis and design may indicate difficulty in hiring internally, needed for projects, or to maintain flexible staffing. By 2008, technical skills and capabilities will continue to leave in-house, with SME organizations targeting support/helpdesk and telecommunications.

In contrast to SMEs, larger organizations identified programming as a skill and capability that would leave in-house, presumably to sourcing.

For the most part, the picture of IT skill and capability needs will not change much by 2008. There is a slight shift from business domain skills to project management skills from 2005 to 2008.